Canadian Dollar Highlights:
- USD/CAD running into thicket of resistance
- CAD/JPY running lower into support area
USD/CAD running into thicket of resistance
USD/CAD has had a strong rally to start the year, but it is about to get tested. The pair is finding itself up against a formidable area of resistance as a new week rolls around, and could determine whether we are finally in for a breakout, or if it will be more of the same range activity.
Running down from the 2016, June, and September highs are trend-lines all within 100 pips of one another. Furthermore, the 200-day moving average is also in play at the moment. If the past years’ worth of price action is indicative of how things will play out we will see a turn lower here.
However, with last year having been such an unusually low year of volatility, resulting in the smallest trading range since 1996, we are due for a breakout of some sort. This could mean the aforementioned levels are hurdled in the days/weeks ahead. To do so clearance well into the 13300s will be needed.
Should we see price action business as usual, then things are about to get dicey for USD/CAD, resulting in volatile price action that indicates a change in power from buyers to sellers. A pivotal week indeed lies ahead – breakout, or trade lower back into the range.
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USD/CAD Daily Chart (Thicket of resistance)
USD/CAD Chart by TradingView
CAD/JPY running lower into support area
CAD/JPY is getting hit from both sides, weak CAD and a stronger JPY on risk-aversion. On Friday, it traded down into the 200-day, with a price support zone not too far below there from around 8170 down to 8128. If risk continues to get shed on further escalation of the coronavirus, then those levels appear likely to be in trouble.
Watching how price reacts down here. A strong rejection at support will indicate a willingness by buyers to step in, but if the response isn’t convincing then a break and more weakness could be on the way.
CAD/JPY Daily Chart (200-day/price support)
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—Written by Paul Robinson, Market Analyst
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